On Wednesday, Prime Minister Justin Trudeau annouced an additional $82 billion as part of the Government of Canada COVID-19 Economic Response Plan. The measures outline $27 billion for Canadian workers and businesses as well as $55 billon to help business liquidity thorugh tax defferals. The latest financial support from the federal government is in addition to the more than $1 billion that was promisted last week through the COVID-19 Response Fund.
As part of Wednesday’s announcement, the government is allowing businesses to defer income tax amounts that are owing as of today and before September 2020. Canadian businesses will be able to defer payments until August 31, 2020. As of last week, the government also increased the credit available to small, medium, and large Canadian businesses, with a new Business Credit Availability Program that will provide $10 billion of additional support to businesses experiencing cash flow challenges. The program will be administered through the Business Development Bank of Canada and Export Development Canada.
Export Development Canada has also been given improved ability to support companies through flexibility on the Canada Account limit. This is meant to allow the Government “to provide additional support to Canadian businesses, when deemed to be in the national interest, to deal with exceptional circumstances.”
Trudeau’s announcement on Wednesday also focused heavily on workers that may be facing difficulties amid government and business measure being taken to help curb the spread of COVID-19.
The Government of Canada is set to provide eligible small businesses with a 10 percent wage subsidy for the next 90 days. Eligible businesses will include corporations eligible for the small business deduction, as well as not-for-profit organizations, and charities. The subsidy, which will exist for a three month period, is meant to support businesses that are facing revenue losses and to help prevent layoffs.
The subsidy will be equal to 10 percent of remuneration paid during the three month period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer.
While the government has been introducing financial support and taking measures to help curb the spread of the virus over the past few weeks, some have been critical that the measure doesn’t go far enough.
The Canadian Federation of Independent Business (CFIB), an association of small and medium-sized businesses with 110,000 members across the country, noted in a public statement that while it sees the subsidy as a good step, “the level of the subsidy needs to be far higher in order to help, closer to the 75-90 percent levels announced in many European countries.”The COVID-19 Economic Response Plan also offered changes to Employment Insurance (EI) benefits. The government introduced an Emergency Care Benefit of up to $900 bi-weekly for up to 15 weeks, to provide income support to workers who must stay home and do not have access to paid sick leave. It is estimated that this will provide up to $10 billion. Eligible workers include those that are self-employed, who are sick, quarantined, or who have been directed to self-isolate but do not qualify for EI sickness benefits.
An Emergency Support Benefit delivered through the Canada Revenue Agency is also set to provide up to $5 billion in support to workers who are not eligible for EI and who are facing unemployment. The government is also waiving, for a minimum of six months, the mandatory one-week waiting period for EI sickness benefits for workers in imposed quarantine or who have been directed to self-isolate and has also waived the requirement for a medical certificate to access EI sickness benefits.
Other measures taken also include extending the tax filing deadline for individuals to June 1, and allow all taxpayers to defer, until after August 31, 2020, the payment of any income tax amounts owing as of today and before September 2020.
In speaking to BetaKit, Matt Roberts, partner at ScaleUp Ventures, expressed that he had been hoping to see more from the government in regards to small-and-medium-businesses, retail companies, payroll relief for businesses, and contractor protection.
“I know they’re struggling [to roll out solutions], but I was hoping they’d do more,” he said. “The relief for startups that are generally cashflow negative that are now cashflow zero is not there.”
With many small businesses having to shut their doors amid various provincial declarations of state of emergency and tech companies having to adapt their services, Canadian tech compaines have not been immune to the long-term effects of COVID-19.
CFIB noted that, as of last weekend, 50 percent of small business firms reported to the organization they have already experienced a drop in sales. “The number is likely to be much higher today,” CFIB said. “One in four businesses reports they will not be able to survive a significant drop in income for more than one month.”
“CFIB will be immediately advocating for additional wage support for workers in Canadian small businesses,” the statement went on to say. “Measures to keep Canadians working and connected to their employer will be what helps the economy recover from the COVID-19 emergency as quickly as possible.”
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